India now has two main GST rates. A merit rate of 5% and a standard rate of 18%. A special de-merit rate of 40% applies to a short list of luxury and sin goods. The 12% and 28% slabs are gone. The change took effect on 22 September 2025, on the GST Council’s decision at its 56th meeting.
The common misreading is that everything got cheaper. It did not. Some items moved up into 18%, some moved down into 5%, and one large category moved to nil. Read the table by asking where your item sits now, not by assuming the direction of travel.
What are the GST rates and slabs in India right now?
| Rate | What it covers | Examples named by the Council | Moved from |
|---|---|---|---|
| Nil | Staples, all Indian breads, some life-saving drugs, and individual life and health insurance | UHT milk, pre-packaged paneer, chapati, roti, paratha, parotta, 33 life-saving drugs | 5% or 12% |
| 5% (merit rate) | Common household goods, most food, most medicines, farm goods, and several everyday services | Hair oil, toilet soap, shampoo, toothpaste, toothbrushes, bicycles, namkeen, pasta, chocolates, coffee, ghee, tractors, hotel rooms up to ₹7,500 a night, gyms, salons, barbers, yoga centres | 12% or 18% |
| 18% (standard rate) | Everything not placed elsewhere, including most consumer durables and vehicles | Air conditioners, all televisions, dishwashers, small cars, motorcycles up to 350cc, buses, trucks, ambulances, all auto parts, cement | 28% for many of these |
| 40% (de-merit rate) | A short list of luxury and sin goods and services | As specified by the Council | 28% plus cess |
| Old rates continue | Tobacco and pan masala, until the compensation cess loans are repaid | Pan masala, gutkha, cigarettes, zarda, unmanufactured tobacco, bidi | Unchanged for now |
Source: GST Council, 56th meeting, 3 September 2025. Rate changes on services and on all goods except tobacco took effect on 22 September 2025.
How should you read this table?
Three cautions. First, the examples are the ones the Council itself named. They are not the full list. The binding detail sits in the Council’s Annexures, item by item, against HSN codes.
Second, “two slabs” is a simplification. Nil is still a rate. So is 40%. And tobacco still sits at its old rate with cess on top. So four different treatments are live at once.
Third, a rate is not a price. A cut in GST only reaches you if the seller passes it on. Compare the shelf price you paid before and after, not the rate.
Which items moved down, and which moved up?
The big downward moves were consumer goods. Air conditioners, all televisions, dishwashers, small cars and motorcycles up to 350cc went from 28% to 18%. Cement did the same. Buses, trucks and ambulances also moved to 18%, and all auto parts now sit at a single 18% rate whatever their code.
Food and household goods mostly went to 5%. Hair oil, soap, shampoo, toothpaste and toothbrushes moved down from 12% or 18%. Packaged namkeen, pasta, instant noodles, chocolates, coffee, butter and ghee did too.
Medicines moved sharply. Most drugs went from 12% to 5%. Thirty-three life-saving drugs went from 12% to nil. Three more, used in cancer and rare disease treatment, went from 5% to nil.
Some services fell as well. Hotel rooms priced at ₹7,500 a night or less went from 12% to 5%. Gyms, salons, barbers and yoga centres went from 18% to 5%.
Why your insurance premium did not fall by 18%
This is the change that matters most on a personal finance site. GST is now nil on all individual life insurance policies. That covers term, ULIP and endowment. It is also nil on all individual health insurance policies, including family floaters and senior citizen plans.
Many people expected an 18% drop in premiums. Most did not see one. Here is the mechanism.
An exempt supply is not the same as a zero-rated one. When a supply is exempt, the seller cannot claim input tax credit on its own costs. The insurer still pays GST on commissions, technology, rent and services. Under the old system it recovered that through credit. Now it cannot, so that cost stays in the premium.
So the honest expectation was always a fall smaller than 18%. Check your renewal notice against last year’s, line by line. Our pages on term insurance and health insurance cover what else moves a premium.
Where you still pay 18% on money products
The Council’s reduction list does not touch banking or financial services. They remain at the 18% standard rate.
That matters more than most people notice. A ₹999 credit card fee costs ₹1,179. A 0.35% loan processing fee on ₹50 lakh is ₹17,500, or ₹20,650 with GST. Brokerage, demat charges and locker rent all carry the same 18%. Our guides to credit card charges and brokerage charges show the all-in figures.
How do you check the GST rate on one specific item?
Go to the HSN code, not to a list of examples. The GST Council published the rate changes for goods by HSN in Annexure I, and by sector in Annexure II. Services are in Annexures III and IV. The CBIC also runs a rate finder for individual items.
A note on our own data. Our rate tables still carry the older five-slab structure of 0, 5, 12, 18 and 28 percent. That was correct until 21 September 2025 and is being updated. Where our table and the GST Council disagree, the Council is right.
Frequently asked questions
How many GST slabs are there in India now?
Two main ones: 5% and 18%. Add nil for exempt items and 40% for a short list of luxury and sin goods. Tobacco and pan masala still sit at their old rates with cess, until the compensation cess loan obligations are cleared.
When did the new GST rates take effect?
22 September 2025, for services and for all goods except pan masala, gutkha, cigarettes, zarda, unmanufactured tobacco and bidi. Those six continue at the old rates until the Finance Minister notifies a transition date.
Is GST charged on health and life insurance premiums?
No. GST is nil on all individual life policies, including term, ULIP and endowment, and on all individual health policies, including family floaters and senior citizen plans. Reinsurance of those policies is also exempt.
Did the 12% and 28% GST slabs really disappear?
Yes, for the items the Council moved. Goods and services that were at 12% or 28% have been placed at 5%, 18% or 40%. The two rates themselves are no longer part of the structure.
Do banks still charge 18% GST on fees?
Yes. Financial services were not in the reduction list, so they sit at the 18% standard rate. Any fee a bank quotes you — card fee, processing fee, locker rent — is before GST unless it says otherwise.
Sources
- GST Council, Recommendations of the 56th Meeting of the GST Council, Ministry of Finance press release, 3 September 2025 — the two-rate structure, the 40% de-merit rate, the insurance exemptions, the named goods and services, and the 22 September 2025 implementation date. Primary source.
- Item-level rates are in the Council’s Annexure I and II for goods and Annexure III and IV for services, by HSN code. CBIC operates a rate finder for individual items.
- Conflict noted: our own tax data still lists the pre-reform five-slab structure. The GST Council’s decision supersedes it.
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